Coles Liquor celebrates third consecutive year of sales growth

Wesfarmers' failed Bunnings UK expansion has dragged down the company's full-year profit by almost 60% to $1.2 billion.

While earnings at its Coles supermarket chain also fell - almost 7% to $1.5 billion - Food & Liquor revenue was up 1.6% to $33,627million. It was Coles Liquor's third consecutive year of sales growth.

Earnings for Food & Liquor were up 3% in the second half as the benefits of more competitive pricing and store renovations reaped rewards.

The company also highlighted at its 2018 Full-Year Results Briefing Presentation:double-digit sales growth in Coles Online, with growth accelerating in the second half. The Liquor Direct channel saw 20% growth in FY18.

During the year, 163 Liquorland renewals were completed, a "next evolution Liquorland format" was trialled successfully and the Liquor Market trial continued.

Liquor Market made its debut in Melbourne's Ringwood in 2016 on the site of a former First Choice store. Described by News Corp as "the ALDI of booze", it has been touted as a future Australia-wide chain. 

Regarding the outlook for FY2019, Wesfarmers noted: "Liquor will progress its transformation, with further opportunities to build on sales and earnings momentum through Exclusive Brand expansion, new routes to market and productivity efficiencies."

Coles demerger on track

Wesfarmers managing director Rob Scott said significant progress had been made in plans to demerge the Coles business before December.

"Coles' balance sheet will have substantial headroom and allow it to make additional investments in new stores, the next evolution of store renewals, online capability and supply chain strategic initiatives," he said. 

"Following the demerger, Wesfarmers will have a portfolio of cash-generative businesses with good momentum and leading positions in growing markets." 

Smart Company has speculated that American giant Walmart may buy Coles. 

Kevin Moore writes: "Having worked closely with Walmart International over the years, and having spent time at their US and Chinese head offices in Bentonville Arkansas and Shenzhen in Southern China, I can say that Australia has always been on their radar as a natural market to expand into.

"The Australian market is logical, well-regulated, speaks English and can be reached via direct flights from LAX and DFW or on Walmart’s private jets from Rogers Municipal Airport in Arkansas. What’s not to like?

"There are also a good number of successful Australian retail executives, who have current and in-depth knowledge of Coles and Woolworths, that have moved to both Walmart International and Walmart USA over the years.

"Plus, Walmart has been competing with Aldi and Trader Joes in the US for a long time, so it already understands Aldi. This type of in-depth knowledge always builds confidence in decision-making for international expansion."